The Mobile Virtual Network Operators model has thrived in regions like Europe and North America but has taken a while to take off in Brazil, for a multitude of reasons.
In this article we’ll trace an overview of the Brazilian MVNO market, its regulations, players and what are the most relevant changes bound to happen in the near future.
Mobile Operator market
The Brazilian mobile operator market is currently dominated by four companies that hold more than 98% of its user base.
These operators, Vivo, Claro, Tim and Oi, show signs of market saturation, such as high cancellation rates and increased customer acquisition costs. Whilst all of them offer somewhat similar services in terms of pre-paid and monthly plans, niche markets for mobile data and value added services are left mostly unexplored supposedly because of conservative stances, failure to provide relevant products and heavy taxation for the expansion of infrastructure.
In recent years, the introduction of MVNO’s, or virtual mobile operators that use an existing operator’s structure but offer services of their own, was expected to be a move that would bring competition to this semi-monopolized market.
Mobile Virtual Network Operators, as new players in this market, could act as a pushing force for competition, explore niche segments and offer of new mobile services unfeasible, or merely uninteresting, to established operators. Their introduction, however, is also subject to extensive regulatory measures, which by themselves may have acted as a limiting factor to the current number of MVNO’s in activity.
Virtual operators were officially regulated to start activity in the country by November 2010, when the National Telecommunication Agency, Anatel, put into action a plan to expand the number of operators in Brazil and offer specific services provided by new players.
The Anatel regulation foresees two types of MVNO’s:
- Authorized: Works as a Telecommunication Service Provider authorized by Anatel, using existing structure and frequencies, able to work on regions not explored by hosting operators
- Accredited: Works as an operator representative with a contract homologated by Anatel, using existing networks, number ranges and interconnections, exempt from state taxation and able to retain it’s customer base in case they upgrade to become an authorized MVNO operator
The main difference between the two models is that an Authorized MVNO can use an existing frequency and transmission systems from the hosting operator but needs to provide all other structure beyond that, whereas Accredited MVNO’s can use all the structure of the operator and end up working as a seller of existing services of the hosting operators, with possible additions of new characteristics to reach other markets.
Current MVNO market players
There are a limited number of authorized MVNO’s in Brazil, and only one major player in activity.
Porto Seguro Conecta
The MVNO commenced operations in 2012 utilizing TIM infrastructure primarily to provide M2M automotive tracking services to its parent company, the Brazilian insurance giant Porto Seguro. The MVNO currently offers cellular data services in limited geographic locations, serving as an operator authorized by Anatel.
Because of its limited reach, Porto Seguro Conecta currently has around 115,000 subscriptions spread across its four working regions, a mere 0.04% market share for Brazil. Their services include insurance-related specialties that work in conjunction with Porto Seguro’s line of benefits, such as device tracking and delivery of cell phones forgotten at home.
Actually the first MVNO to be authorized in the country, Datora Telecom directed itself to activities such as operating as a Mobile Virtual Network Aggregator, or a enabler company for new players entering the market as Accredited, data wholesale and M2M connection services.
Datora served as a partner for the launch of Porto Seguro Conecta, and currently manages the MVNO’s operations, data transmissions and connection agreements.
New players in the MVNO market
Some companies have announced an interest in entering the Brazilian MVNO market and are at different stages of starting their activity in the country. These new players include:
- Virgin Mobile: The subsidiary for Latin American operations of the British conglomerate that has already experienced success in launching its services in Chile and Colombia. It has received Anatel authorization for MVNO activities and has settled on the usage of Vivo structure for data transportation
- CorreiosPar: A joint venture between the Brazilian postal service and the Italian estate-owned Poste Italiane has gained authorization directly from the Brazilian Ministry of Communication to work as an MVNO. They are currently in the process of choosing its hosting operator
- Sisteer: This French Mobile Virtual Network Enabler has gained authorization to work as MVNO by Anatel, signed a multi-year contract with Vivo but has yet to publish current plans to start activity in the near future